Standard & Poor's, on Monday, downgraded the ratings of the top Spanish banks, including Santander and BBVA, after slashing the country's credit standing because of worsening deficit and growth problems.
The banks affected include Santander and its subsidiary Banesto, BBVA, Banco Sabadell, Ibercaja, Kutxabank, Banca Civica, Bankinter and the local unit of Barclays.
S&P downgraded Banco Santander by two notches to ‘A-‘ from ‘A+', with BBVA cut to ‘BBB+' from ‘A.'
S&P, on Friday, slashed Spain's sovereign rating by two notches to ‘BBB+' and said, on Monday, the same considerations “could have potentially negative implications for our view of the economic risk and industry risk affecting the Spanish banking industry.''
Just as S&P made the announcement, official figures showed the Spanish economy slumped into recession in the first quarter, shrinking 0.3 per cent after a similar contraction in the last three months of 2011.
The economy, saddled with the highest unemployment rate in the industrialised world at some 24.4 per cent, has struggled since a property bubble imploded in 2008, compounding the downturn caused by the global financial crisis. Faced with mounting debt and falling revenues, the government is trying to stabilise the public finances and cut the annual public deficit.
